BHARAT HARI SINGHANIA Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) THE assessee is an individual. In his return for the assessment year 1972-73, under the W.T. Act, he showed the value of certain unquoted shares held by him at a figure which was arrived at on the basis of the mean of the values obtained on the break-up basis and the yield basis. THE WTO did not accept this method of valuation of the unquoted shares. He held that they were liable to be valued by Rule 1-D of the W.T. Rules. He computed the value of the unquoted shares accordingly. He repelled the further submission of the assessee that while computing his own wealth on the valuation date the estimated amount of capital gains tax which would be payable by him in the event of the sale of these shares should be deducted. This view was upheld on appeal as well as on further appeal by the Tribunal. At the instance of the assessee, the Tribunal has referred the following questions of law for our opinion :

(2.) THE first question is to be decided in favour of the department on the strength of a Division Bench decision of this court in CWT v. Sripat Singhania [1978] 112 ITR 363 (All). In that case, this court held that the value of unquoted equity shares was liable to be determined in accordance with the method prescribed by Rule 1-D. THE first question has to be answered against the assessee.

(3.) IN other words, the contention that the necessary expenses should be deducted would be the correct method of computing price, if the relevant words under Section 7(1) had been "the price which in the opinion of the Wealth-tax Officer the assessee would receive" instead of the words "which it would fetch". Such an interpolation in the Section is not permissible on the ground of equitable considerations.